McClatchy layoffs?

OK. Shorter answer. McClatchey is damn near bankrupt. The company is underwater.

Gannett is not doing well but is doing better than McClatchey.

Gatehouse is doing OK. There are two reasons for Gatehouses's success. Small market papers, which Gatehouse specializes in, have weathered the storm a little better than the large metros McClatchey and Gannett publish. But most importantly it is because Gatehouse declared bankruptcy a few years back and were able to eliminate some debt. Gannet and McClatchey have never been in bankruptcy.

 

Damn, Excellent post. I am educated now on the matter. Thank you.

 

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What are this company's options if it's the only one near bankruptcy if I read this board correct? I'm just trying to figure out what the 3-4 name companies are going to do cause I feel like we are getting closer to all online product, just so they can cut 50 percent of staffs. Once we go all online, 50 percent of the newsroom will be clipped at all shops in my opinion. It'll be a whole new model. Very bare bones. No high school coverage at all, zero. No college coverage at all, just a lot of links to the college websites. Pro teams will be covered in towns witih teams and that'll be it. Not sure what the smaller papers will cover sports wise. Believe it or not, maybe the presence of newspapers without college or pro teams will keep the print edition alive. Hard to believe they'd kill the only possible source of income and go all online when they know in their smaller towns the populace won't be much interested in reading online high school stories. If small to medium sized papers don't follow the lead of the big papers and go all online, I doubt the major companies will go all online because they can't do that until everybody is on the same page and goes online only with them.

 

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McClatchy had cash flowed of about 80 million dollars last year on just under a billion in revenues. Revenues in the second quarter were down seven percent, which is a typical result for a newspaper company. IF revenues are down seven percent for the year then revenues are down about 70 million dollars, which wipes out cash flow. And does not leave much money to pay off all that debt.

So McClatchy cuts some more and hope that someday the business turns around.. I have posted before but will repeat. I would not go to work at a McClatchy paper if I could not handle a layoff. It might be worth it to take a job at McClatchy major metro, particularly if they offer you a nice beat, and you can financially handle a layoff. For example, you are single and know how to tend bar so you can always support yourself. The experience gained may be worth unemployment. But if I had a family who depended on my income I would not go.

Lee has the same problems as McClatchy. Think of McClatchy as in a hospice care and Lee being in intensive care.

 

Lancey, you seem to have some excellent insights into these situations. In my large, extended metro area, the papers are owned by McClatchy, Tronc (which I worked for in its previous incarnation as the "old" Tribune Co.) and Cox. What do you think of Tronc? Cox is a bit harder to figure because it's a private held company in many other businesses besides newspapers --it's probably not going away anytime soon, though what happens to the papers long-term is another matter.

 

What is the reason McClatchy hasn't gone the bankruptcy route? They've gotten the debt under a billion, which is far better than the $12 billion hole Zell saddled Tribune with.

 

Because the McClatchy family would be wiped out. The family has been involved with the Sacramento Bee since 1857.

 

Tronc has the same revenue problems that McClatchy has. Tronc is less profitable than McClatchy. Tronc only cash flowed about 93 million last year, which is 13 million more than McClatchy, even though their revenues were 700 million dollars higher. Tronc revenues were down about eight percent in the second quarter so they are looking at a revenue decline this year of about 130 million. But Tronc has less debt and this ownership group has pumped some money into the company so they are in much better shape than McClatchy.

The population of Southeast Florida, which I think is the the area you are referring to, is roughly the same size as one paper towns such as Washington, Atlanta and Houston. I don't think that it makes economic sense to have three dailies in markets that size. But I don't know if McClatchy can sell Miami because of bank covenants (the same thing would apply to Fort Worth). The stock market capitalization of McClatchy is only 50 million dollars and the company has virtually no cash. So McClatchy does not have the money to buy Ft. Lauder dale or Palm Beach.

The Cox family has enough money to run Palm Beach for another century or so if they want. But also they have enough money to buy a lot of newspapers- like Tronc- and they are not. This leads me to believe they make a little money in Palm Beach and are emotionally attached to it and don't want to sell.

So McClatchy and Cox are neither buyers or sellers which means they all stay independent for a while.

 

Cox has gotten caught up in wave after wave of layoffs that are crippling the company's newspapers, which isn't a surprise in these times but still is sorta baffling because of the family's diversified interests. Don't know how emotionally attached they are anymore.

 

My guess is that the layoff enough people to ensure at least a small profit. People, no matter how wealthy, do not like to lose. But Atlanta is the family flagship and they Cox has owned the Atlanta Journal since 1939. The family has owned the Dayton paper since 1898. James Cox was the Governor of Ohio and the Democratic Presidential nominee in 1920. I think those would be tough sells emotionally.

Palm Beach may have lasted this long because the Tribune Company was in bankruptcy for a long time and could not buy anything. But Tronc tried to buy the Orange County Register and the Chicago Sun-Times but have not made a run at Palm Beach which I find baffling.